Archives for April 2020

The troubled UK-based airline has reportedly hired investment bank Houlihan Lokey to secure the deal. The lender already has over a hundred potential bidders, with around half of them asking for more information about the offer.

According to the news outlet, hedge fund Lansdowne Partners, Singapore wealth fund Temasek and Northill Capital, as well as US based firms Centerbridge Partners and Cerberus Capital Management, have shown interest in the deal. 

Also on rt.com Air France-KLM to get €10 BILLION Covid-19 aid in loans from France Netherlands

In contrast to the Sunday Telegraph’s claim that the £500 million lifeline for the troubled company was “effectively shelved,” other British media said that bailout talks with the UK government are still ongoing. The company could turn to the private sector to raise some cash as it considers all options due to the massive costs of the coronavirus crisis. 

As Covid-19 has hit the aviation sector hard, halting most travel, Branson whose Virgin group has a 51 percent stake in the UK-based carrier warned that it could go bust without financial aid. In order to persuade the UK government to greenlight a £500 million bailout request, the business magnate offered his private Caribbean island as collateral. However, the move has been seen as “PR posturing” by some, while others pointed that it’s ridiculous for him to ask for taxpayer money as he moved to the tax-free British Virgin Islands 14 years ago.

Also on rt.com ‘Least deserving’ Branson roasted as Virgin Atlantic seeks massive state-sponsored bailout despite not paying staff

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Article source: https://www.rt.com/business/486923-branson-virgin-atlantic-sale/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

As crumbling demand for crude and lack of storage space have been wreaking havoc on the oil market, China has been boosting oil exports in a move seen as taking advantage of record low oil prices. Covid-19 has severely cut the demand of one of the top global importers, but in March China purchased 9.68 million barrels per day (bpd), that is 4.5 percent more than it did during the same period in 2019. 

Also on rt.com Coronavirus isn’t stopping trade between Russia China

Russia and Saudi Arabia supplied almost equal amounts of oil to the country last month, with shipments standing at 7.02 million tonnes (1.66 million bpd) and 7.21 million tonnes (1.7 million bpd) respectively. However, the data released by the General Administration of Customs shows that purchases from Riyadh fell 1.6 percent, while Russian crude imports rose 31 percent, according to Reuters calculations. 

The increased imports come as the Chinese economy is slowly getting back to normal, with most enterprises resuming operations after weeks-long quarantine. China became the first country to be hit by the deadly virus at the end of last year. Since then the outbreak shifted from Asia to Europe and the US, which has become the new epicenter of the epidemic. As of Sunday, over 939,000 people were infected in the US, while 53,934 were killed by the virus, according to Johns Hopkins University data.

China doubles rate of crude stockpiling as oil falls below $0

The pandemic has sapped global demand for crude which might fall by around 30 percent, according to some gruesome estimates. As both onshore and offshore storage facilities have been running out of space, oil prices tumbled to record lows earlier this week, with WTI futures for May delivery entering negative territory. Prices for the international benchmark Brent also fell to multi-year lows.

In a bid to help the market rebound, the Organization of the Petroleum Exporting Countries (OPEC), as well as allied producers led by Russia, agreed on historic output cuts earlier this month. Starting in May, the signatories will have to slash production by 9.7 million barrels per day. However, many fear that the cuts came too late and will be not enough to ramp up the prices as demand will not rebound any time soon.

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Article source: https://www.rt.com/business/486917-china-russia-oil-imports/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

With demand for motor fuel plunging, refiners are cutting crude processing, and crude oil storage capacity in America is filling fast. The glut is set to worsen in the coming weeks, and storage capacity at Cushing, Oklahoma, could be full by the middle of May, analysts say.

Also on rt.com Oil inventories near breaking point as American Petroleum Institute reports 13 million barrel build

The fast demand destruction in the pandemic threatens to fill up storage across America soon, forcing oil prices lower and forcing oil producers to idle more rigs and curtail more production than initially thought.

Total US petroleum consumption stabilized in the latest reporting week to April 17 at 14.1 million barrels per day (bpd), up slightly from the 13.8 million bpd estimated consumption in the previous week, which was the lowest weekly consumption level in EIA’s statistics dating back to the early 1990s.

The oil market crash is far from over

But crude oil and gasoline inventories continued to jump while crude refinery inputs continued to drop, according to EIA’s latest inventory report from this week.

US crude oil refinery inputs averaged 12.5 million bpd during the week ending April 17, which was 209,000 bpd less than the previous week’s average. Refineries continued to cut run rates and operated at 67.6 percent of their capacity. To compare, refiners would typically operate at more than 90 percent capacity just ahead of the summer driving season. But this year, the summer driving season is postponed and is expected to be very weak.

Gasoline consumption – the most significant part of US petroleum consumption – has crashed the most since the lockdowns began, with the product supplied down by 40 percent to 5.3 million bpd as of the week ending April 17, from an average of 8.9 million bpd in 2020 through March 13.

Even if lockdowns across the US were to be lifted tomorrow, gasoline demand is not expected to stage a V-shaped recovery. Instead, it would likely stay around the current levels for weeks and probably months, pushing both gasoline and crude oil inventories higher.

“As negative gasoline demand is still expected to plague the US throughout May, and a very weak driving season is expected during the summer, it is unlikely that demand for crude will return in the first half of the year,” Rystad Energy said this week.

Also on rt.com Crude price collapse will finally force US oil industry to cut production or go bust

To deplete swelling crude and gasoline inventories, which are higher than five-year averages, US oil producers will need to cut oil production. They will do this because the market will force them to.

The glut in the US and around the world is set to lead to the biggest-ever monthly decline in fracking activity in America, according to Rystad Energy.

“If we assume that no new horizontal wells are put on production from April 2020 onwards, total LTO production will decline by 1 million barrels per day (bpd) by May, 2 million bpd by July and by 3 million bpd by October to November, with the Permian Basin accounting for more than half of nationwide base decline,” the independent energy research company said.

Trump’s tough talk on Iran ‘boosts’ oil prices – but demand storage issues persist

According to Wood Mackenzie, “It’s possible that if current conditions continue, Cushing storage tanks could reach capacity by mid-May.”

“In large part, the damage is done for 2020, and we believe this significant slowdown will lead to a decline of one million to two million fewer barrels per day from activity reduction. Production shut-ins will add to that number as storage capacity peaks,” WoodMac said after WTI Crude May futures dipped into negative territory for the first time ever early this week.

As global oil demand is not expected to quickly return to its usual 100-million-bpd level – if ever, considering the change in our lives in this pandemic – US producers are forced to react to the market forces and slash output much faster than they themselves and analysts had expected just a month ago, not to speak of at the beginning of this year.

The 9.7 million bpd cuts pledged by OPEC+ for May and June will not come close to the demand loss. The OPEC+ intervention – even if every producer in the group fully comply with their quotas (for the first time ever) – will not be enough to prevent oil inventories in the US and the world from overflowing within weeks.

That’s why the real rebalancing act will be the ‘intervention’ of market forces – producers in free markets such as the United States and Canada are not pledging quotas, but their producers are reacting to market conditions and will be slashing output, hoping to weather this perfect storm.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/486914-us-shale-suffering-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

In a statement issued on Saturday, the Brazil-based jet manufacturer accused its American counterpart of using “false claims” to pull out of the deal, which would give Boeing an 80-percent stake in Embraer’s commercial jet unit. Embraer says Boeing wanted to avoid its commitments to close the transaction and pay the agreed purchase price as the US company faces financial troubles linked to the 737 MAX fiasco.

Also on rt.com 27,000 back to work: Boeing to restart production at Washington state plant next week as company suffers amid Covid-19 shutdown

“Embraer will pursue all remedies against Boeing for the damages incurred by Embraer as a result of Boeing’s wrongful termination and violation of the MTA [Master Transaction Agreement],” the Brazilian aircraft producer said.

The statement came shortly after the US aviation major claimed that Embraer “did not satisfy the necessary conditions” of the agreement. After what Boeing called “productive but ultimately unsuccessful negotiations” to resolve some existing disputes, it was free to cancel it.

Coronavirus pandemic to cost global airlines $314 BILLION in revenue – IATA

“It is deeply disappointing. But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues,” Marc Allen, president of Embraer Partnership Group Operations, said.

However, Embraer insists that it was in full compliance with its obligations under the agreement, arguing that it satisfied all necessary conditions before the deadline.

The collapse of the deal, which was set to mirror a similar Airbus-Bombardier partnership, comes as the aviation sector faces a major crisis amid the coronavirus pandemic. The deadly virus has halted most travel, grounding almost entire fleets across the globe and resulting in huge losses. It could take years for the industry to offset the aftermath of the coronavirus crisis.

Boeing was facing financial troubles even before the Covid-19 outbreak started wreaking havoc across the globe. After two deadly crashes that left 346 people dead, its once best-selling 737 MAX jets were grounded throughout the world, and the company saw massive cancellations of jet orders by its customers, which led to its first full-year loss in more than two decades.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/486907-embraer-boeing-deal-collapse/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Al-Jadaan told media this week that the Kingdom might issue bonds worth $26.57 billion (100 billion riyals) this year in addition to an earlier issue of $31.88 billion (120 billion riyals) worth of debt.

Saudi Aramco, for its part, is considering a $10 billion sale in part of its pipeline business, Bloomberg reported on Thursday.

“The kingdom went through similar crises in its history – maybe even worse – and was able to pass through them,” Al-Jadaan said. “This is not an exception.”

Most observers note that this price crisis is like no other in history. The unique combination of excess supply and a 30 percent drop in demand weighs heavily on oil-dependent economies throughout the world, and even low-cost Saudi Arabia is not exempt. 

Also on rt.com Indian refineries slash Middle East oil imports as storage fills up

The oil market is indeed flooded. The Wall Street Journal reported earlier this week, citing Saudi oil officials, that at least one in every ten VLCCs, each capable of carrying 2 million barrels of oil, is used for floating storage with many holding Saudi crude. Some of that, the sources said, had yet to find buyers.

Saudi Arabia is bracing for the inevitable blow. In March, the government asked state agencies to cut their budgets by at least 20 percent, Reuters reported, citing sources in the know who declined to be named. That was before OPEC+ agreed to implement cuts of 9.7 million bpd in hopes this would help prices. It didn’t.

Now, according to an analyst with an Egypt-based investment bank, the Saudi deficit could widen to 15 percent of GDP, Bloomberg notes. That would be less than the 17 percent recorded for 2016, but it would still be quite brutal for the Kingdom that had to roll back austerity measures it implemented during the 2014-2016 crisis pretty quickly as bureaucrats rebelled.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/486747-saudi-arabia-oil-crisis-debt/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

According to Grass, the question is not if gold is going higher, “it’s always the paper price of currency that is fluctuating its prices.”

He said: “An ounce of gold is always an ounce of gold. So, basically, gold is not going higher in price.” And, if you really want to buy physical gold then you’ll have to pay much more than the paper price, the analyst added.

Grass pointed out that physical gold and the paper price of gold are two different things. “I truly believe that gold can go higher but the paper price of gold could go down to zero because it is a paper security, it’s debt security, it’s just a promise.” If you buy physical gold, that’s completely different, it’s an ownership, you own an asset, real goods, he explained.

Also on rt.com ‘The Fed can’t print gold:’ Bank of America sees bullion price surge to $3,000 as paper money crumbles

At the moment there’s an unprecedented debt bubble because of the coronavirus pandemic, and all financial markets are completely overvalued, Grass said. Talking about the stock market, he noted that we haven’t yet seen all the bankruptcies, all the unemployment rates. “People are still paralyzed and in fear because of coronavirus… and the financial panic of the stock market is still coming.” 

The price of gold is rising because the purchasing power of the US dollar and other currencies, like the euro, are depreciating. “Whenever you’re printing, you’re debasing the currency.”

Grass explained that when you buy something, you have to buy when things are cheap, like physical gold “which is money, everything else is credit.”

He continued: “So, gold is cheap, and it’s physical, and it’s outside the banking system, and it’s a perfect hedge against all the risks in the current financial system.”

Also on rt.com World’s super-rich are hoarding physical gold in secret bunkers

Physical gold will save those who keep it, as long as governments don’t confiscate it, according to Grass. 

Silver and platinum are also a good deal, Grass said, adding he “would not recommend palladium, it is in a bubble because of the car manufacturing industry…”

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/486630-physical-gold-perfect-hedge/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The KLM aid package of up to €4 billion ($4.32 billion) will likely come as a combination of state guarantees and bank loans, Dutch Finance Minister Wopke Hoekstra said on Friday. The flagship carrier of the Netherlands has been hit hard by the coronavirus crisis and the majority of its planes remain grounded.

The announcement came shortly after Paris pledged €7 billion to Air France, KLM’s parent company.

“Air France’s planes are grounded, so we need to support Air France,” French Finance Minister Bruno Le Maire stated.

Also on rt.com Germany’s flag-carrier airline Lufthansa in ‘intensive negotiations’ for state aid to stay afloat

The French aid package will come in the form of a direct €3 billion loan from the state, and a €4 billion loan provided by a consortium of six French and international banks. Ninety percent of the second loan will be guaranteed by the state as well.

The Covid-19 aid will come with certain conditions, including that “Air France must become the most environmentally friendly company on the planet,” Le Maire noted.

The airline industry has been devastated by the coronavirus pandemic, as demand for passenger travel plummeted amid lockdowns and travel restrictions imposed by nations around the world.

The Air France-KLM group is no exception, and shares of the company have dropped by 55 percent so far this year.

Also on rt.com Malta flag carrier set to fire 80 PERCENT of pilots after talks fail amid coronavirus crisis

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Article source: https://www.rt.com/business/486843-airfrance-klm-aid-package/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The KLM aid package of as much as €4 billion ($4.32 billion) will likely come as a combination of state guarantees and bank loans, Dutch Finance Minister Wopke Hoekstra said Friday. The flagship carrier of the Netherlands has been hit hard by the coronavirus crisis and the majority of its planes remain grounded.

The announcement came shortly after Paris pleaded a hefty sum of €7 billion to Air France, KLM’s parent company.

“Air France’s planes are grounded, so we need to support Air France,” French finance minister Bruno Le Maire stated.

Also on rt.com Germany’s flag-carrier airline Lufthansa in ‘intensive negotiations’ for state aid to stay afloat

The French aid package will come in a form of a direct €3 billion loan from the state, as well as a €4 billion loan provided by a consortium of six French and international banks. Still, 90 percent of the second loan will be guaranteed by the state as well.

The Covid-19 aid will come with certain conditions including that “Air France must become the most environmentally friendly company on the planet,” Le Maire noted.

The airline industry has been devastated by the coronavirus pandemic, as demand for passenger travel plummeted amid lockdowns and travel restrictions imposed by many nations around the world.

The Air France-KLM group is no exception and the shares of the company have dropped by 55 per cent so far this year.

Also on rt.com Malta flag carrier set to fire 80 PERCENT of pilots after talks fail amid coronavirus crisis

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Article source: https://www.rt.com/business/486843-airfrance-klm-aid-package/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“If the Central Bank prints money and gives it out at a zero rate, what could that lead to? I can recall the 1990s. This will lead to an ‘explosion’ of inflation, and for those who received those banknotes it will be hard to buy anything,” she said.

Nabiullina added that, according to the bank’s estimates, an easing of monetary policy is needed to maintain annual inflation close to four percent over the forecast horizon.

“The slump in domestic and external demand this year will significantly contain inflation, which reduces the risk of its substantial deviation downwards from the target in 2021 and over a medium-term horizon if no additional monetary policy measures are introduced,” she said.

Also on rt.com Russia cuts key interest rate amid coronavirus lockdown plunging oil prices

The bank governor also said that the economic situation will be “returning to normal step-by-step,” assuming that governments will be gradually lifting or considerably easing the majority of current restrictions in the second quarter of the year. “In this case, we can expect that in the third and fourth quarters, economic activity will be recovering quarter-on-quarter,” she said.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/486819-free-money-inflation-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Since the March Board of Directors meeting, the situation has changed dramatically. Significant restrictive measures have been introduced to combat the coronavirus pandemic, both in Russia and across the world, which negatively influences economic activity,” the central bank said in a statement.

The Bank of Russia added that it has reviewed the baseline forecast scenario and is shifting to an accommodative monetary policy. According to the bank forecast, given the monetary policy stance, annual inflation will reach 3.8-4.8 percent in 2020 and will stabilize around four percent later on. The country’s GDP (gross domestic product) is forecast to decrease by between four and six percent in 2020.

Also on rt.com Russian Urals crude sinks below $12 amid epic oil market meltdown

“If the situation develops in line with the baseline forecast, the Bank of Russia holds open the prospect of a further key-rate reduction at its upcoming meetings. In its key-rate decision-making, the Bank of Russia will take into account actual and expected inflation dynamics relative to the target and economic developments over the forecast horizon, as well as risks posed by domestic and external conditions and the reaction of financial markets.”

The Russian economy is, beyond this, expected to follow a recovery path, with growth predicted to total 2.8-4.8 percent in 2021 and 1.5-3.5 percent in 2022. The bank’s baseline scenario assumes an average price of Urals oil blend of $27 per barrel in 2020, with its subsequent rise to $35 and $45 per barrel in 2021 and 2022 respectively.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/486796-russia-cuts-key-interest-rate/?utm_source=rss&utm_medium=rss&utm_campaign=RSS